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Forex regulation types

2 years ago

The types of regulation of the forex market by state regulators can be conditionally divided into levels based on the requirements for a broker to issue a license, and the level of control over the broker’s activities. As a result, the main indicator of the reliability of a licensed broker is determined by the level and certain solidity of the regulator that issued the license.

In this article, we will take a closer look at the distribution of regulators according to the degree of their authority in the forex market.

  1. The first level of regulation traditionally refers to the United States, where there are two large regulators – the Commission for Futures Trading and the National Futures Association. And also Japan, where there is an analogue – the Office of Financial Regulation and Supervision. These state organizations are the most demanding for the licensing of financial activities in the forex market and brokers applying for their licenses.


  1. The UK Financial Conduct Authority and the Australian Securities and Investments Commission are generally referred to as tier two. Obtaining a license for these regulators is subject to a list of very strict requirements, and also lends itself to serious and comprehensive control.


  1. The third level of regulation generally includes CYSEC (Cyprus Securities and Exchange Commission), as well as the Malta Financial Services Authority. These regulators declare very serious requirements for forex brokers, but in fact, obtaining this type of license is a much simpler task, and control and reporting are not so critical.


  1. The BVI Financial Services Commission and the Belize International Financial Services Commission are usually tier 4. Regulatory requirements in these jurisdictions are much simpler, which contributes to their popularity with buyers.


  1. The fifth and sixth levels include all other offshore commissions, the regulators of these jurisdictions declaratively control the activities of forex brokers. The Seychelles Financial Services Authority and the Saint Vincent and the Grenadines Financial Regulatory Authority, as well as the Vanuatu financial regulator, are assigned to these levels.


In recent years, the Latvian forex license has been popular, but the main problem of the regulators of the EU countries is their overstated amounts of authorized capital, which frightens off start-up forex companies.

As a rule, 95% of start-up companies start with obtaining a level 5-6 license, which is quite a logical decision. The main differences between the tiers are the terms and cost of the license. Timing varies, from 1-2 months for the lower levels and up to 12-18 months for the first two.


Forex regulators rating

  1. Commission on Futures Trading of the USA (CFTC)
  2. US National Futures Association (NFA)
  3. UK Financial Conduct Authority (FCA)
  4. Australian Securities and Investments Commission (ASIC)
  5. Cyprus Securities and Exchange Commission (CySEC)
  6. Malta Financial Services Authority (MFSA)
  7. Financial Services Commission of the British Virgin Islands (FSC BVI)
  8. Belize International Financial Services Commission (IFSC)
  9. Seychelles Financial Services Authority (SFSA)
  10. Financial Conduct Authority of the Islands of Saint Vincent and the Grenadines (SVG FSA)
  11. Financial Dealers Principal’s license for Vanuatu
  12. Latvian Financial and Capital Markets Commission (FCMC)


If you are interested in this information and you want to buy or register a company with a financial forex license, contact the lawyers of the Nikol Consulting Group company. Having direct contacts with representatives of financial regulators, our managers will provide you with qualified advice and provide legal support for the entire procedure for obtaining or buying a license.

By contacting the specialists of the Nikol Consulting Group for help, you will receive quality services at optimal prices!